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Demand for Off-Grid Solar Electricity: Experimental Evidence from Rwanda

Author

Listed:
  • Grimm, Michael

    (University of Passau)

  • Lenz, Luciane

    (RWI)

  • Peters, Jörg

    (RWI)

  • Sievert, Maximiliane

    (RWI)

Abstract

Providing electricity to the unconnected 1.1 billion people in developing countries is one of the top political priorities of the international community, yet the costs of reaching this objective are very high. The present paper examines whether the objective and the associated costs are justified by the value that target beneficiaries assign to electricity. We provide experimental evidence on the revealed willingness-to-pay (WTP) for three types of off-grid solar electricity devices. Our findings show that households are willing to dedicate a substantial part of their expenditures to electricity. In absolute terms, though, the WTP does not suffice to reach cost-covering prices. Different payment schemes, which we randomized across our sample, do not alter the WTP significantly. If universal electricity access is to be achieved, direct subsidies might be necessary. We argue that from a public policy perspective it is more rationale to promote off-grid solar than grid-based electrification because of its better cost-benefit performance.

Suggested Citation

  • Grimm, Michael & Lenz, Luciane & Peters, Jörg & Sievert, Maximiliane, 2016. "Demand for Off-Grid Solar Electricity: Experimental Evidence from Rwanda," IZA Discussion Papers 10427, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp10427
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    References listed on IDEAS

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    More about this item

    Keywords

    real-purchase offer game; willingness-to-pay; electrification; technology adoption; energy access;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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